The issue of joblessness in the country came back into spotlight with the recent attack on the Parliament, as the accused reportedly mentioned that they were upset with their unemployment condition, and aimed to highlight the severity of the issue through the attack. Although, the government data depicts that the unemployment rate in urban areas, declined to multi-quarter lows in H1 of FY24, the Centre for Monitoring India Economy (CMIE) data does not support the same.

The Periodic Labour Force Survey (PLFS) showed urban unemployment rate in Q1 and Q2 of FY24 stood at 6.6%, the lowest since the start of the series in FY18. In the last quarter of FY23, the urban unemployment rate was at 6.8%. And during the pre-pandemic period, urban unemployment rate ranged between 7.8-9.7%.

The S&P Global’s Purchasing Managers’ Index (PMI) surveys too have shown manufacturing and services firms consistently increasing headcounts in the backdrop of strong demand conditions, although the pace of employment in services sector have slowed.

Experts say formal sector employment has seen a 3-5% increase but with variations across industries. Within services, the financial services sector has recorded uptick in employment, while the Information Technology (IT) sector has witnessed layoffs.

Rural unemployment, on the other hand, could not be gauged via quarterly PLFS bulletin, but a look at the recently released annual survey, which took the reference period as July 2022 to June 2023 said unemployment rate in rural areas dropped to six-year low of 4.4% in 2022-23 from 7.8% in 2021-22. Moreover, data from the Mahatman Gandhi Rural Employment Guarantee Act (MGNREGA) dashboard shows that demand of work from households was up 4.4% on year so far in the current financial year, and 23.9% more than the comparable pre-pandemic period.

The true picture would only be available once the annual PLFS (July 2023-June 2024) data will be released next year.

“The employment scenario has improved significantly due to increase in ‘self-employment’, which is a method to cope up with livelihood crises,” said Lekha Chakraborty, professor, National Institute of Public Finance and Policy (NIPFP). “The employment outlook will be better only if the government strengthen its policies on ’employer of last resort ‘ policies by providing job guarantee programmes in urban India as well,” she said.

Notably, the annual PLFS survey also showed in 2022-23, the overall unemployment rate in both male and female stood at 5.1% each. The male unemployment rate crashed from 6.9% in 2021-22 to 5.1% in 2022-23, while the female unemployment rate decreased from 5.8% to 5.1%.

Meanwhile, according to CMIE’s dataset, India’s overall unemployment rate, which includes urban and rural, averaged 8.1% in the first 11 months of 2023, which is only lower than 10.3% recorded in 2020 in the past five years. In 2019, 2021, 2022, the unemployment rates were much lower than 8%.

In urban areas, the unemployment rate averaged 8.9% in January-November as against 8.4% in 2022 and 8.5% in 2019. In 2021 and 2020, it stood at 11.5% and 9.0%, mainly due to migration of urban labourers to rural areas due to the pandemic outbreak across the country.

While, in rural areas, the unemployment rate averaged way lower at 7.8% in January-November, but is the second-highest in past five-years barring 2020.

Some, however, say the CMIE’s unemployment rate is volatile and keeps fluctuating month-on-month as a large section of people who are employed are in the informal sector, which is not permanent.

“The range has been 7-10% and varies across months in 2023. This will be due to temporary labour hiring for specific jobs which can be in agriculture as well as industries related to production/services which change on a seasonal basis,” said Madan Sabnavis, chief economist at Bank of Baroda.

Sabnavis has termed the overall unemployment level “stable” since it is difficult to see a trend amid high monthly variations. “Rural employment is hard to gauge due to the case of families working on land. Reverse migration from urban to rural can create a picture of more people working in rural areas though could be a case of disguised unemployment,” he said.

When it comes to the PLFS, the respondents are asked about their job activity in past seven days, which reduces the margin of error. However, for the CMIE data, the reference period is just one day. Thus, if an individual is not doing any activity on the day of the survey or a day prior, he/she is termed unemployed.

Former Member of the Prime Minister’s Economic Advisory Council Surjit Bhalla called the CMIE data “unreliable” and said it cannot be compared with any other data in the world for measuring unemployment or labor force participation.